The economic outlook for the trucking industry is turning increasingly positive, according to new reports from FTR Transportation Intelligence and ACT Research.
ACT Research said Monday that its For-Hire Trucking Index has now grown for seven consecutive months.
After hitting a three-year high in March, freight volume grew at a slower rate in April, ACT said. However, the trucking industry consulting firm said there is still evidence of acceleration in the growth trend.
Motor carriers are telling ACT that business improved in April and they have a positive outlook. One carrier reported that the number of drivers it is losing to local jobs and the oil and gas industry is increasing, which it reads as a sign that the U.S. economy is improving.
Fleets manager also said they plan to increase spending on new equipment, with 65 percent planning purchases in the next three months.
“This is the strongest back-to-back reading since the third quarter of 2015,” said Kenny Vieth, president at ACT Research. “Fifty-three percent of purchases planned will be new with five percent reporting plans to lease equipment.”
Meanwhile the Trucking Conditions Index from FTR dipped in March after seeing an uptick in February. But the consulting firm said that was not a cause for alarm.
The index decreased 2.14 points to 2.97 in March, FTR said. The transportation forecasting firm saw a 2.5-point jump in February to 5.11 points.
FTR said it sees recent and steady improvement in spot shipping rates. Such rates are individually negotiated between what are typically small carriers and independent truckers and brokers and can be a leading indicator of prices for freight hauling.
The increase is demonstrating the industry expects more demand for shipping than there are drivers to take the loads.
“The TCI has settled into a positive, but not robust, level of market conditions over the last 12 months,” said Jonathan Starks, chief operating officer for FTR.
Trucking conditions are likely to stay in the moderate range until later this year when the Electronic Logging Device, or ELD, mandate comes into effect, Starks said. The devices, which electronically track the number of hours truckers are driving, are expected to reduce the number of truckers on the road. Some truckers are saying they will leave the business rather than comply with the regulation, which could reduce their profits by forcing them to adhere to the driving limits.
“Once you combine the productivity hit coming from full implementation of ELDs with continued freight growth and the capacity reductions that have already occurred, you get a market that is poised to see significant movement in rates,” Starks said.